US household wealth ticks up 1.4 pct to $94.8 trillion

WASHINGTON, June 8, (AP): Buoyed by higher stock prices, Americans’ household net worth rose 1.4 percent to $94.8 trillion in the first three months of this year, a trend that could support future spending.

US stock and mutual fund portfolios jumped $1.3 trillion in value in the January-March quarter, the Federal Reserve said Thursday. Home values increased $499 billion.

Total household wealth includes checking and savings accounts, and subtracts mortgages and other debt. Unlike some other economic measures, household wealth has fully recovered from the Great Recession and gone far beyond pre-recession levels. The proportion of American adults with jobs, for example, remains nearly three percentage points below where it stood in December 2007, when the recession began. And average hourly pay is rising more slowly than it was before the downturn.

But in the nearly eight years since the recession ended, US household net worth has soared past its pre-recession level of $66.5 trillion. It fell to $56 trillion in 2008 before slowly recovering. The figures aren’t adjusted for inflation.

That disparity between household wealth — which is highly concentrated — leaping higher while jobs and income growth lag reflects some of the unequal aspects of the economy’s recovery.

Record-high stock prices are the primary driver of greater household wealth. The Dow Jones industrial average has more than tripled from its recession-era low of 6,547 to 21,174 on Wednesday.

Yet just 10 percent of the US population owns 80 percent of stock market wealth. Meanwhile, middle income households derive most of their wealth from their homes. Nationwide, home prices didn’t fully recover from the downturn until last September.

Americans typically spend a bit more when their home values and other wealth rises, which economists call “the wealth effect.” Yet there are signs that the postrecession buildup in wealth hasn’t led to as much spending as it may have in the past.